Ahead of the Curve: Three Competitive Advantages of For-Profit Colleges

—Co-written with Brian A. Rodriguez | Research Assistant at the Pullias Center for Higher Education, University of Southern California—

Despite facing criticism in recent months over operating practices, for profit colleges and universities hold a number of advantages over their non-profit competitors.

Given past and current trends, signs point to the commonsensical notion that for-profit colleges and universities (FPCUs) will adapt to economic and market demands. Such an observation, however obvious, is not really what we have seen with regard to traditional postsecondary institutions. They are largely relying on business and pedagogical models from the 20th century. But what of the for-profits?

Below are three business advantages for-profit higher education institutions hold over most of their public and not-for-profit competitors:

1. Building partnerships

FPCUs are better able, and more willing, to build partnerships with employers. They build rapport with businesses and organizations not only because of the brouhaha surrounding gainful employment but also because, ultimately, if their product — education for a career — is not successful, the customer will not buy it. The result is that these sorts of relationships enable FPCU students to land internships and positions and get a leg up in a difficult economic environment.

By comparison, public and not-for-profit institutions, broadly defined, do not currently have the incentive, wherewithal or personnel to provide job assistance. With gainful employment regulations on the way, for-profit institutions will have to do a better job of helping their students land jobs — and so will all other postsecondary institutions. Ironically, however withering Congressional criticism has been over the last few years over gainful employment, it has forced the for-profits to adapt. In contrast, traditional institutions largely watched from the sidelines. But now all of higher education is under the microscope to see how well they do in terms of helping their graduates find work. With greater financial resources at their disposal, many for-profit institutions will be able to enhance their job assistance services to help graduates secure employment. In doing so, for-profits will be able to rest assured their graduates are steadily finding jobs and upholding their institution’s reputation.

2. Scaling up and scaling down

For-profit colleges have always kept tabs on the jobs of tomorrow. Expect this trend to continue. For-profits will expand into booming fields and eliminate fields the student-consumer no longer finds attractive. Traditional institutions will continue to adapt much more slowly; because of their dedicated workforce, traditional colleges and universities will continue to offer courses and degrees in low-demand fields. By keeping up with future economic and job trends, for-profits will remain a key provider in select fields by adding seats and availability of courses in flourishing fields. As a result, for-profits will be able to better market themselves as specialists in select fields and cater to potential applicants. A by-product of this adaptability if they expand in ethical and consumer-savvy ways is that state legislatures will look for ways to support the FPCUs.

3. It’s about who you know and what you know

For-profit colleges will not only focus on building close ties with potential employers, they will also pioneer and expand competency-based education. Moving away from a traditional education model that centers on a student’s seat time, for-profit colleges will adopt competency-based education models, which emphasize students’ knowledge, abilities and skills. For-profits will seek ways to become more efficient in teaching students what they need to know while also reducing the amount of time students need to spend inside the classroom. Students won’t necessarily graduate from a program because they’ve spent x number of hours in the program or taken x number of units in the program. Instead, they’ll graduate when they have demonstrated mastery of the subject matter and gained the ability and skills needed to get a job.

Moving toward a competency-based curriculum will create two foreseeable advantages for for-profit colleges. First, they will be better able to graduate students in a more timely fashion. Second, having a greater level of measured learning in which students prove their competence will satisfy employers and increase the likelihood of a graduate landing a job. Further, as criticism of accreditation continues to increase, states will look to alternative models for determining the worth of a college degree — and for-profits could offer a viable alternative.

Conclusion

As always, the challenge for the for-profit sector is the action it takes with regard to these trends. If default rates remain high on student loans, if the justifiable scandal over veterans is not resolved and if students end up in low-paying jobs with sky-high loans, consumer confidence and state and federal regulatory patience will force the FPCUs into bit players in the postsecondary theater. It’s largely up to the for-profits to determine the role they want to have.

Readers Comments

I agree with much of what Tierney writes. However, I would say these are three competitive advantages any institution should, and can, have. I don’t think for-profits have a monopoly on this. In fact, some public institutions are quite innovative in their approach to, say, forming partnerships. Continuing education units in particular can be very good at any of the three advantages Tierney discusses.

That being said, it’s true that some public institutions continue to be bogged down by their own processes and traditions; their sheer size and the weight of their longstanding practices can sometimes work against them. Let this be a wake-up call to any institution looking to build a 21st-century, sustainable economic model.

I wonder what types of jobs these graduates of for-profit schools are being placed in. Sure, for-profits have an incentive to get their students into jobs and, in that sense, demonstrate outcomes, but let’s not pretend their motivation is altruistic in nature. I would say public institutions are more invested in the outcomes of their students, whereas for-profit institutions’ first concern is for profit — it’s in their name — with student success as a happy by-product, but not a primary focus.

I disagree with you entirely. If graduates of for-profit schools weren’t getting good jobs, the for-profit’s reputation suffers. Since for-profit institutions survive on positive word-of-mouth and tangible, measurable results, there’s more incentive for them to serve their students, though they may not approach it in an ‘altruistic’ way. But are public institutions really any less self-interested, considering their funding is often contingent on outcomes too?

At the end of the day, what should matter is whether graduates are finding success and achieving their goals. If for-profits are able to help students do that in a way public institutions still aren’t, then all the power to them.